The Ruble’s Record Low: Dollar and Euro Soar Against the Russian Currency

On the morning of Friday, August 11, the dollar and the euro reached new records of value against the ruble. One dollar cost 98.25 rubles, and one euro – 108.07 rubles. Since the beginning of August, the dollar and the euro have increased by 7% in Russia, and by 38% and 42%, respectively, since the beginning of the year. Currently, the ruble has reached its lowest value since the beginning of the war in Ukraine.

Against the dollar for the first time in nine years, the ruble fell for a seventh straight month despite oil prices hitting their highest level since the start of the year, which has helped Russia’s oil export earnings hit a 10-month high.

The central bank’s decision to cancel currency purchases has only had a short-term psychological effect, and it does not change anything in the currency market. Also, a huge level of capital flight is evident.

“The collapse of the ruble has already started an inflationary spiral that cannot be stopped anymore. The only thing that can avoid high inflation is the return of the ruble to the exchange rate of 90 to one dollar. In order to achieve this, the Central Bank must act radically, raising interest rates very quickly,” says Yevgenijs Suvorovs, economist of Centrokredit bank.

If the exporters do not increase the supply of currency on the exchange, it is very likely that we will be able to observe a further decline in the value of the ruble, with the dollar rate reaching 100 rubles for one dollar. Meanwhile, the euro may rise to 110 rubles as the supply of the currency is limited but demand from importers is steady as the fall season approaches.

“Unless the geopolitical and domestic political situation changes, the situation with the exchange rate is unlikely to change,” admits Dmitrijs Polevojs, director of Loko-Invest.

He warns that currently currency buyers in Russia have the opportunity to buy the currency at a potentially lower price, as the value of the ruble will be even lower in the foreseeable future.

2023-08-11 11:23:00
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